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If you’re in a financial pickle, there is so much cutting costs you can do before it begins to affect your life significantly, here we will show you ways to generate more income!

Income Reviews

AMAZON FBA – Honest Review of selling on Amazon for 3 Months

So over this post I will cover everything I have learned over three months of selling on Amazon FBA. During these months, I utilized a business model revolving around the concept of Retail Arbitrage. In this post I will be outlining a few of the concepts I learned as well as sharing some of the knowledge I picked up during my time selling.

Please note, my experiences are based on Amazon FBA (Fulfilled by Amazon) not Amazon FBM (Fulfilled by Merchant). I will cover the differences and their pros and cons in another post. In general, with FBA you send your products to Amazon, and they deal with the logistics of shipping it to the shopper and the customer service in the case of an issue. Amazon holds your products at a fee and there are quite a few other fees involved, however the concept of sending the products in and forgetting about it is much nicer than having to actively manage your shop.

There are 4 Major types of Amazon FBA Businesses:

First what is Arbitrage?

Simply, it is the act of buying from one location and selling it on another at a higher price. Please note, that during my time selling items using Retail Arbitrage on Amazon FBA, at no point did I purchase essential items and sold them at a marked up cost. Retail Arbitrage has gained a pretty negative name due to sellers purchasing products and then selling to at-risk individuals at a much higher price. I tried to stay away from essential products like food, disinfecting wipes, sanitizers and masks to name a few. I focused on purchasing shoes, old books from Value Village, ATV parts, hardwares, journals, mason jars and toys.

I know a lot of people who have made a significant income focusing on products such as Inflatable pools, sewing machines, gym equipment, PS5’s, GPU’s, printers and patio heaters. For me, while this is very much viable, it was more hassle than it was worth for me since these products come with a large payoff but you are taking much larger risks. You need to take your location into consideration as well.

Living in Canada, there is a smaller market and that is something that is important to consider. More on this in a future post.

Why would anyone use arbitrage?

It essentially has to occur for the current economy to operate. If you work a 9-5 job, you are a key player in someones arbitrage move. Your boss purchases your time for a price, in hopes that he can sell your value to others for a greater price, you get an income for your skills and take on (hopefully) no risk, but your boss has to ensure that he is finding clients, keeping them happy and hopefully you as well, so you continue to bring him positive growth.

Another example?

Alright, imagine you are a grocery store. You have large refrigerated trucks that you take over to the farmers, and perhaps you buy 100 apples for 30c each, and then you bring it back to your grocery to sell it for a dollar each. Now you can decide you want to drive 30km just to pick up a handful of apples for 30c, but I am going to make he assumptions, most of you rather just go over to your local grocery store and would be willing to pay a dollar for it instead.

While it is easy to see that there are implications where a profit does not need to be made. It is equally important to have this source of imbalance because it causes growth. Amazon’s, massive success is all thanks to this imbalance and they were able to capitalize on it by making everything just a lot more convenient.

So thats it, in terms of retail arbitrage, you are creating an opportunity for the buyer to get the product with your value added. You should also utilize the practice of ethics, and by that I mean, don’t be the person that sits on a mountain of essential items to drive up the price and then dump it on people who have no option but to buy it at ridiculous prices.

Types of Arbitrage

Retail Arbitrage

Simply, it is when you buy products from big box stores like Walmart, Marshalls, Home Depot, Costco, Best buy, Lowes, Rona, Kohls, Target, etc. Then turning around and selling them on Amazon for a profit. Price discrepancies are very common especially in stores like Canadian Tire and Walmart where sales and discounts are very common. In other places like Kohl, you may end up using coupons or discounts offered by the stores, stack the discounts to find amazing deals that you end up selling on Amazon for a strong profit.

Other times retail arbitrage can also be when the customer decides the convenience of having a package show up at their front door is worth it. With retail arbitrage, you are jumping on existing listings that are already selling, you do not have to put in the additional work of taking pictures, listing and advertising the product. A major advantage of retail arbitrage is the competition. When it comes to it, all you are competing with are local resellers of the products and you are turning it around and selling it to the entire country.

Online Arbitrage

This is essentially the same thing as Retail Arbitrage. However, Online Arbitrage is the act of finding price discrepancies online and then selling on Amazon FBA. In this situation, you are competing online potentially against people around the World. This model offers a lot to people who enjoy the convenience of sourcing inventory and running your entire business from your computer. It is important to mention again that Online Arbitrage is a significantly more competitive than Retail Arbitrage.

Private Label

Source products on Alibaba or other manufacturer and create your own brand and but a label on it. It will be your own listings that you have to make, specific to your products. That includes taking your own professional photographs and doing your own marketing. This type of Amazon FBA business model requires you to have a greater risk appetite and a diverse skillset. You will be buying larger quantities of products most likely from overseas, investing in marketing and finding ways to drive up reviews and hold a customer base.

Wholesale

Buying bulk amount of an already established product at a significant discount. For instance, this is exactly what your favorite retailers do. They buy products by companies that are considered household names such as Lotions by Aveeno, they purchase them at a significant discount, and then allocate a dollar amount to them so they can make a profit after paying for management fees, storage fees and any other fees a larger or smaller retailer might incur.

So what should I know before I get started?

Well the first thing I will tell you is, do not listen to youtube guru’s that are trying to sell you on the fact that they are making millions of dollars per month. Note, it is really easy to bump up the numbers you see on most Amazon FBA Seller Central accounts.

How do guru’s bump their numbers?

Easy, if you find products and sell them constantly without worrying too much about your profit margin and fees, it’s really easy to show off impressive numbers on your amazon seller account and walk away with next to no profit.

What do you mean fees?

Amazon FBA charges you close to 40% on all product sales, and I suppose you can call it value added service such as storing your items in their warehouse and giving you a market place full of buyers.

Note the 40% listed above is a rough amount. But the figure below is before I started getting charged for shipments to the facilities.

Amazon FBA fees

So, How much did I earn with Amazon FBA?

In general the total gross revenue I was able to generate was approximately $4187 CAD. Not too bad! In total I had invested approximately $2500 – $3000. So I was able to walk away with a profit of approximately $1187 CAD at the low end. Please note, there is a total of 27 products currently listed in my store with various quantities. So while I have to pay a few dollars a month for the storage of those products it’s not too bad at all. You may have noticed the months I actively found and listed products on my store.

Most of the products were listed between mid-October to mid-December. Due to the Christmas rush I think I was able to receive a lot more sales. One thing not shown here, is returns, while I was lucky enough to not have received too many returns, the few that I did receive were on big ticket items. There are ways to offload those losses, either to your taxes or get the product sent back from Amazon, but those are all very involved and at the time I just let them slide.

Amazon FBA Sales Summary

How to make even more money with Amazon FBA

Learn the rules, this is so dang important especially when you first start out. Know exactly what you can and can’t sell on Amazon. For example, I had found an amazing price for compressed air, only to find out that you are not allowed to ship it using Amazon FBA. When you first start out, there will be a lot of products you will be gated against. The term gated essentially means you are not able to sell that product, without getting more reputation, sales or documentation that you purchased those products from a reputable wholesaler.

Do not let this deter you, if anything this is great news for everyone that is looking to make a profit in this industry. The barriers that Amazon places for new sellers actually ends up promoting the sellers that are serious and are in it for the long game.

When I first started, I was gated from essentially everything that I could purchase at an amazing price. Over time, I started getting un-gated from a lot of companies, including Nickelodeon and Pokemon. I want to make another writeup covering how to work with gates and how to get products un-gated over time. If you have any specific questions you can reach me here.

Amazon FBA Gated Skincare

In Summary

I must add, with the right skillset and drive it is quite easy to make a pretty sizeable income from Amazon FBA. After lots of discussions with veteran members, it is also possible to transition this to a mostly passive income. For instance, it is possible to source your products during dry times such as January, and then sell the products during high times such as November and December. There are several different ways you can automate a pretty big chunk of this process, especially if you find a formula and products that have been tested to work for you.

So what’s my verdict? I think this Amazon FBA is a great business to diversify into. I am planning on getting geared to sell more once stores start re-opening in Ontario. The only down side to selling on Amazon in my experience is that it was very labor intensive and you are at the will of retailers. However, once you build out your business, I was getting a consistent $500CAD every month even after Ontario went into full lockdown with minimal intervention.

Amazon FBA is a great platform to learn and have in your back pocket, while I know it is very easy to make this a full time career, I am using it to supplement my income and fulfill my need for shopping.

I had to lock up quite a bit of capital at first and my house was a mess of boxes that were getting packed full of inventory to ship out. Starting again, I would be more organized, utilizing a business bank account to ensure I knew exactly how much I am spending. I would get a Virtual Assistant involved early on so I could step away from the logistics of dealing with returns.

If you want to learn more join my email list, I am currently working on a E-Book that covers everything from getting started to automating your Amazon FBA business. This E-Book will be sent for free for all of my email subscribers.

Learn more about Amazon FBA here.

Trading Tips Income

Options Fundamentals For Beginners

Options are by far the BEST way to increase returns on the assets you choose to trade, but also the very BEST way to protect & hedge yourself against market crashes and corrections. There is also spot and levaraged futures trading which I dive into as well, if you are a beginner I recommend you get started here.

Let’s go over the fundamentals in a little more detail and we will call this our option primer. It goes without saying, if you plan on trading option contracts, do so with extreme caution. There are 100 horror stories for every success. Trading is a skill that requires tremendous amounts of discipline and greed has no place here.

Calls & Puts

When looking at options there are two kinds of options you can choose to trade: Calls and Puts.

In the standard stock market, buying one call option contract gives the buyer of the contract the right, but not the obligation to buy 100 shares of the stock at the strike price the buyer selected, anytime up until the option’s expiration date. This is advantageous because you need to pay a fraction of the cost vs. buying at spot price (full price per stock) while participating in the same profit profile. If the trade goes well for the call buyer, meaning the asset goes way above the selected strike price, the buyer gets to buy the asset at the lower strike price value he has chosen, even though the asset is then currently worth more than the strike price.

In crypto there are two major differences however:

1. Each call contract can equal 1 BTC, however you can also trade mini contracts that are less than 1 BTC. Again, for stocks 1 call contract = 100 shares always. So, knowing how contracts are sized in different markets is important.

2. Most crypto exchanges will be cash settled. So, you will never be forced to actually buy the BTC/asset shares at expiration (like you are in the stock market). Rather, the exchange will settle the differences and net you out the profit (or loss) on the trade.

Per their definition, put options give the buyer the right, but not the obligation, to sell an asset at a strike price that the buyer selected, anytime up until the option’s expiration date. This is advantageous because the buyer of the put option can potentially profit on as a short trade that moves almost 1:1 (dollar for dollar) as the asset falls (making you profit). Think of it like car insurance.

Buying vs Selling Options

You can either buy or sell, both calls or put options. Buying calls is a long strategy on an asset. Buying puts is a short strategy on an asset. When you trade these the opposite direction (buying vs selling), they simply change to the opposite directional bias. Example: if you are “selling” calls you are now making a bearish bet. And when you are “selling” puts you are making a bullish bet.

Buying a Call = DEBIT to your account. Taking a bet, the asset will go above your strike price in exchange for PAYING the premium asked – BULLISH

Selling a Call = CREDIT to your account. Taking a bet, the asset will go below your strike price in exchange you RECEIVE the premium instead – BEARISH

Buying a Put = DEBIT to your account. Taking a bet, the asset will go below your strike price, in exchange you PAY the premium asked – BEARISH

Selling a Put = CREDIT to your account. Taking a bet, the asset will go above your strike price, in exchange you RECEIVE the premium instead – BULLISH

This might seem confusing at first, but it becomes easier with repetition and practice. There must be a buyer or seller on the opposite end of all option trade. If you are buying and they are selling the same option type that each would have the exact opposite outlook and directional bias. I will occasionally update my content with images and videos in the future to drive this concept in more.

Options Fundamentals

Creating a Basic Options Trade Plan.

Things you need to have in mind BEFORE you execute an options trade:

1. What is the ‘underlying’ asset you are trading? (BTC, SPX, SPY, etc.)

2. Will you be using calls or puts?

3. What is the strike price are you plan to select?

4. What is the expiration date for your option you are planning to go with?

5. How much is the option contracts Premium? Are you paying or receiving the premium? (i.e. will you be buying or selling the options?)

6. Is the exchange American style or European style? (Most crypto options are European, while US stocks are American)

7. Is the trade physically settled or cash settled? (Most crypto exchanges will be cash settled, and most stocks you trade will be physically settled. Some are not, for example SPX trades are cash settled because you cannot own ‘shares’ of an index)

Every time you decide to make an options trade you should go over these 7 details in your trade plan.

If you are trading crypto options, the most essential thing before putting on your trade is making sure you understand the difference between cash settled and physically settled (point #6) and the difference between American style and European style (point #7). There will be additional posts in the future covering this in greater detail.

Basic Options Definitions.

Let’s go over a few of the main definitions now:

Strike Price

The strike price is the price of the asset in which the trader has chosen before entering the trade. The trader is either hoping the assets price climbs either above or below their selected “strike price” before expiration for them to make a profit. The strike price is a fixed price at which the asset of the option can be purchased or sold on expiration or before. Again, in cash settled exchanges you don’t take possession of the asset at expiration, they just net you out either a profit (win) to keep or a debit (loss) to pay.

Expiration Date

The expiration date is the date that the bet (trade) ends. It is a chosen and carefully selected date by the trader, that he makes before entering the trade. This expiration date is the last day in which the option can be exercised or closed. After an option expires, the trade is over, and the trader simply moves on and starts evaluating their next trade.

As per the definition, European style options cannot be exercised before the expiration date. However, exchanges like FTX do offer alternatives to closing the trade other than just through the exercising of the option on expiration day. You can close the trade and FTX will simple pay you the netted profits just as if you had to take possession (assignment) of the asset at the discounted price (your strike price) and then sell it at the current higher value. They just pay you the profits instead or deduct your losses. Getting back into crypto trading after a year this was the one thing that even caught me off guard for a couple days, especially since I was trading on Interactive Brokers. So, make sure to take note of what style your exchange trades in and how they settle (cash or physical). Not all crypto exchanges are the same.

Premium

The premium (current price of the option) is what the trader either pays or receives for making the trade. It is either a credit or a debit to the trader. When I buy my calls on BTC, I am “paying” the premium price asked, for the right to enter the trade (aka bet). When I sell my SPX options on the income trades, the premium is what I RECEIVE for taking the option trade and SELLING them.

Know that as the options get closer to expiration their time value starts to lessen and decay. Meaning the premium is reducing in price overtime. This is a good for the option seller as they become more profitable as the time value erodes. They also earn money if price action is not moving fast enough. It is bad for the option buyer as the more the premium erodes, meaning he can only get less and less for the option if he decides to close the trade.

So essentially the ‘option buyer’ is hoping that price climbs faster than the time value of the option erodes. And the ‘option seller’ is hoping that the time value erodes faster than price moves.

Intrinsic Value (or Time Value)

The other main factor that effects an options price is its intrinsic value. Which is the value the option has according to how far below or above the strike price that the asset has moved. A long call buyer for example is betting that an options intrinsic value (movement of the asset) climbs faster than its time value is eroding. If this happens you can be profitable WITHOUT the asset ever going over your strike price!! And it can happen way before expiration as well. This is normally when I close our early before expiration at take profits.

Now if this intrinsic value (or time value) has you confused, know that we have an entire channel dedicated to going over these two subjects (posted soon, reference channel when posted). Also know that it does not change the fact ever that if the assets price moved is in the direction of your bias and ends up above or below your strike price you chose at expiration, you will always be profitable. Then time value doesn’t matter at that point.

Implied Volatility & ‘The Greeks’

Another factor that influences an options price both before you trade it and while in the trade is VOLATILITY. Implied volatility to be specific (not historical).The change of the premium price of an option in comparison to the change in the price of the asset is called its “Delta”. Delta is a part of what we call the “Greeks”, which is generally the hardest concept to understand when it comes to options for beginners. I will be working on additional posts that will cover the greeks in more detail.

Summary

When you are a “Buyer of options, your maximum profit potential is unlimited, and your max risk is the amount of premium you paid for the option (be it call or put). When you are a “Seller” of options, the maximum profit on a short option (be it call or put) is limited to the premium received for shorting the asset, no matter what the assets price action may do. The risk can be unlimited without any trade management. This is how I know how much profit I can potentially make each day before I place my SPX income trades as a “seller” of options.

Options provide ways to leverage, manage, and protect trades in ways that no other trading instruments can accomplish. The benefits to taking the time to truly understand this way of trading could dramatically impact your results for your entire trading career. Options are not going anywhere. It is simply the next level once you realize extreme leverage trading on exchanges like Bitmex are structured HEAVILY against you. It solves every single type of trade situation you can imagine or get yourself into.

Options are contracts between two people with opposite bias. It brings them together to creates and accomplish a “bet” between the two parties. They can be used to leverage long or short positions or simply to hedge existing asset positions. In their most mature form, they can create consistent income for the trader that chooses to master them.

For additional resources, check out Investopedia’s resources on options trading.

Trading this way has put food on my table for the last 6 years. Take it from me, this is what you want to spend your time learning if you want to get serious and your goal is to become the best trader you can possibly be. There is simply no trading instrument more powerful than options.